MULTI Peril Crop Insurance (MPCI) became a reality for WA growers last week when Latevo International with Allianz Australia offered its first policies for the 2014 season.
In what has been described as a landmark achievement for Australian agriculture, WA growers will now be able to mitigate some of the risk in their farming enterprises in the coming season for the first time.
The policy will protect growers against the effects of frost and drought for a cost of up to $10 a tonne with what has been termed "Certainty Insurance".
Certainty Insurance is designed to protect growers against future catastrophic events that occur less than once in five years, and to ensure production costs are replaced in a poor season.
Latevo International was forced to shut down its pilot program in 2013 when it offered its official policies too late in the season.
At the time the company was not able to achieve the geographical spread required by its underwriters.
Latevo International chief executive Andrew Trotter said the company had received significant inquiry, and had an additional 100 grower applications Australia-wide since Friday last week.
When Latevo launched its pilot program in 2013, Mr Trotter said the company aimed to get 100 farm businesses on board in WA.
And while he would not say how many farmers had taken up the policy in WA for the 2014 season, he noted good interest from throughout Australia.
Mr Trotter said Latevo International was only running at almost 50 per cent of its initial capacity and expected the company could insure up to 200 farmers in WA this year.
"We have had good coverage throughout WA but we are looking for more, we are a business," he said.
"It is a good geographical spread and it is the banding model that works for the higher rainfall guys.
"It is not just designed for the eastern Wheatbelt."
Farmers entering the program will be offered 70pc of their five year average returns in their first year, which according to Mr Trotter would cover most business costs.
He said farmers who had experienced a run of poor seasons, including those located in WA's marginal eastern Wheatbelt, could provide further long term data and information.
"If you have had a one-in-30 year drought, and a one-in-20-year frost and they have happened two years in a row, analysis should not be based on the past five years but the five years before, then we can smooth the data out," he said.
"That is why we are saying to people that have had a rough run they need to submit more data over a longer period of time to demonstrate they are actually a good risk profile."
When asked whether coverage was subject to changeover time, Mr Trotter said the Certainty Insurance product was similar to car insurance, whereby fewer claims would result in improved pricing over time.
"If you have poor seasons and claims, it will affect your five year average and your coverage will be adjusted according to your risk profile," he said.
Farm Weekly asked Mr Trotter if the required up-front payment would be a hurdle for cash-strapped farmers.
"It has been a hurdle for some but that is why we are offering a money-back guarantee to those people who aren't offered a policy," he said.
But according to Mr Trotter there have not been any WA farmers who were not eligible for the cover.
"Has everyone been offered the coverage they want, no, has everyone been eligible, yes," he said.
"They might want coverage for $300/ha but they might only get $180/ha.
"The variation from grower to grower is enormous, and that is why every grower has to be individually analysed."
Mr Trotter said the application process took three weeks and required an independent audit which incurred an initial $5000 outlay by the grower.
"It is a full audit of the business," he said.
"It is a once-off, and it is no different to applying for a loan at the bank.
"You have to be analysed to be eligible.
Bunbury-based Latevo International manager Deane Allen said after wide industry consultation, the company had received good feedback. "People now understand the product," Mr Allen said. "I think the big issue I have found is there was a lot of misinterpretation about what the product is and how it works.
"A lot of people thought it was yield-based but this is a dollar per hectare income base."
Mr Allen also noted there were also a lot of people who believed the cost of the premium was a lot higher than it actually was.
"A lot of people were overstating what the costs would be and thought it was a lot more expensive than that," he said.
Mr Allen said cover offers for 2014 close on April 30.
The WA Nationals called for the stamp duty payable on Multi-Peril Crop Insurance (MPCI) products to be waived for the 2014 growing season in September 2013.
WA Nationals members representing the Agricultural Region Shane Love, Mia Davies, Martin Aldridge and Paul Brown called for the waiver in an attempt to assist WA growers obtain a MPCI product this year.
They said the removal of the stamp duty payable on MPCI products for two years would assist in maturing the market and improve uptake as new products were developed.
At the time the group of MPs said swift action from the government on the matter would encourage more farmers to take out insurance for this growing season.
It is understood the group wrote a letter to Minister for Agriculture Ken Baston calling for the waiver, which was then referred to the Treasury for advice.
Now six months on, it is unclear if any progress has been made on the matter.